francine: policy shift in an op-ed from bloomberg opinions, the bank of england governor sestak before raising rates to give officials more firepower in future crisis. president trump's first rally since the pandemic began made headlines due to weak turnout. what does this say about enthusiasm? wirecard withdraws its latest financial results, saying they are missing 2 billion euros on the balance sheet probably doesn't exist. shares sink.

happy monday. this is "bloomberg: surveillance ." khan francine lacqua in london. let's get to your markets. investors, trying to win a number of infections rising with all of the extra stimulus being put out. if you look at what the market is focusing on, stocks are falling, gold is nearing highs on concerns about the virus, treasuries on the dollar hovering below $40 a barrel in new york. market checks through the day. let's get to the first word news in london. here is dani burger. disappointing crowds for donald trump's first campaign rally since the virus outbreak. the event in downtown tulsa attracted far fewer supporters in the white house had touted. it was overshadowed by continuing criticism of the president's response to the pandemic and his reaction to protests against police brutality. >> you are warriors. thank you.

we had some very bad people outside. [cheers] we had some very bad people outside. they were doing bad things. i stand before you today to declare the silent majority is stronger than ever before. [cheers] dani: china has confirmed its proposed national security law would allow beijing to override hong kong's legal system. the announcement sheds new light on a move that threatens the city's status as top financial center. state media says the proposal will give the central government jurisdiction over an extremely small number of national security cases. a major shift for the bank of england. governor andrew bailey is stressing the need to reduce the balance sheet before hiking rates. writing for bloomberg opinion, bailey says the plan would give officials more firepower in future crises. the balance sheet has already grown to 700 billion pounds

thanks to the bank's bond buying program. global news 24 hours a day, on-air and quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm dani burger. this is bloomberg. cases of covid-19 in the united states are approaching 2.3 million after a daily increase of 1.2% on sunday. there are signs of a possible resurgence of the virus in the u.s.'s sunbelt states. had a record number of cases while infections in florida jump. great to have you on the program, as always. if you are a market participant, the fluctuate looking at the recovery given the stimulus and pitted against infections. does it make a difference if it is first or second wave? >> the first thing is that this

is a known unknown. markets are not oblivious to reinfection risks so in that sense, i think we are very much aware of itin so it would make a if weence and so far -- were to see outbreaks getting out of control, it would damage market sentiment. so far, what we are seeing in outbreaks, we expect but at the same time, signs they are being contained. haveina overnight, we only seen nine new cases so the recent outbreak in beijing seems under control. i think they are very much known unknowns. francine: if you look at the regions and you look at asia compared to europe and the u.s., in the past, one of the --stions was whether asia

because it has dealt with this earlier than anyone else, was almost at the forefront of the recovery. what is your take on china and asia now? jean: it is a benchmark in terms of trying to get a ridge through of what it might look like in other regions. what we have seen in china is a restart. is restart israel, but at -- real, but at the same time, we see gradual. when you try to look at other regions and what they tell you, in our view, places like europe maybe are in a better position dealing with the virus earlier. i think they have better been able to contain it, so one thing you can read from china is you can restart. the virus can be contained if appropriate measures are taken and it looks better for europe and the u.s. at this stage, given the way it has been playing out over the last few

months. i think it is easier for europe to restart without seeing massive reinfection. francine: and i right in thinking that you like european assets more than we spoke last time, which was six weeks ago? is this on the commission plan? what did you warm up to europe? jean: there are a couple of things. we were cautious because of the different policy response. the responses have been slower to come in europe and was giving us a concern initially. i think there are two things that have changed since we last spoke. the policy response is real and taking shape. there is a european recovery plan and a real game changer. measuresalso the ecb that are starting to have an impact. we've seen the largest pickup

last week in operations, long-term financing. nowpolicy part of it is taking some real shape and that is the first point. the second is going back to what we were discussing before. we think so far the way the virus has been dealt with in europe gives us some hope that the restart can be stronger in europe and it is possible to do it without -- according to our analysis, without big risk every reinfections.of make sheer up relatively more attractive than it used to be relative to the u.s.. francine: what things do you like in europe? do you go through bombs because of the noise we heard about the ecb in terms of fragmentation of what they are buying or do you like equities? jean: we were already positive on credit and bonds in europe

given the significant policy response globally that we've seen coming. what has changed is it is broader and. -- end. we are considering the equity side of things because of what you just mentioned. bonds were already an asset that were attractive given policy. i think the broader risks support being more positive and overweight on the equities. that is what they are considering a. -- now. francine: jean boivin from blackrock stays with us. do central banks reduce balance sheets before raising rates? andrew bailey weighs in on the subject. more on central banks next. this is bloomberg. ♪

francine: economics, finance, and politics. this is "bloomberg: surveillance ." i'm francine lacqua in london. wirecard says it is missing 1.9 billion euros, probably doesn't exist. the payment firm is withdrawing results for fiscal 2019 and the first quarter of 2020. the company says it is in constructive discussions with lenders about renegotiating terms. the scandal has seen wirecard shares collapse and its chief executive depart. lufthansa's ceo says the bailout bill may not pass.

the biggest shareholder is threatening to block the plan which would dilute its holdings. it casts doubt about the nine -- about the plan to rescue the airline. the sides are holding talks before a virtual shareholder meeting thursday. pg end he has one thing final approval for its bankruptcy plan. it includes billions of dollars in damage claims stemming from wildfires linked to the company's equipment. it needed a judge to sign off to qualify for an insurance fund that will help recover damaged claims from any future blazes. francine: let's get back to the conversation on central banks. still with us is jean boivin from blackrock. do you worry central banks are doing too much and if there is another downturn, they won't have an effect? we have a piece from andrew bailey saying he would rather do one thing to make sure we are better prepared for the next crisis. jean: i'm not worried we are

doing too much at this stage. i think the single most important thing is to bridge this natural disaster, this health crisis with policy support in order to avoid permanent scars and damaged the economy. i don't think we are doing too much. that is point number one. we, in many ways, the policy was in awe have seen direction that we thought would be required in the next downturn, so i think that's very ,mportant, but what is missing more than maintaining firepower, what is missing is guardrails that will govern how we can exit from these policies once the shock is passed. now we are in a slippery slope there. it was absolutely required. i think we don't need the

firepower going forward, but it is guardrails missing to prevent slippery slope and uncontrolled fiscal deficit spending going forward. francine: when do we start worrying about how we finance, how we deal with all of this extra created debt? is a massive increase in debt we are going through right now. we haven't really seen a fiscal in peacetime.ize i think this is required. however, there are going to be questions eventually about the ability of markets to find and absorb this debt. i think that is why the central banks have an important role to play in coordination with the fiscal authority going forward to prevent an uncontrolled rise in interest rates. we do expect central banks to be

effectively doing some control to prevent that servicing cost to increase too much but there is a limit -- limit to how much it can do that. the most important thing for the to helpis to restart, sustain the debt so that is why we need to address the current situation, but central-bank coordination would be required to prevent that servicing costs to become too large. francine: we have a great opinion piece by andrew bailey in bloomberg opinion saying he n the balancengtheb sheet. what are the chances the bank of england has to go into negative rates? the jury on negative rates and their usefulness is still very much out. i think it is not obvious that the net impact of negative rates is positive or, if anything, i

don't think you can go very far into negative territory in any that, one way or the other, i don't think this will be a silver bullet to solve the situation. it might be useful in the margins but i have some doubts. i don't think the way forward is about negative rates. i think the sequencing of the exit, whether it is reducing the balance sheet before you start raising rates and so on is a described approach as by governor bailey, but i don't think we are anywhere close to considering reducing the balance sheet in any case, i think this is going to be some way out and when it happens, it will be approached very carefully. francine: is governor bailey's message a warning shot to money markets? especially the ones denominated in dollars? jean: of course, i don't know

exactly what is the motivation of firing a warning shot. fort of all, i think central banks, we are some distance from the implementing them, but at the same time, there might be the desire to liked markets it is not this will be in place forever and at some point, we will need to exit from it and start to talk about how that will happen, might be in line with providing some kind of signal or maybe a warning shot, but again, i think this is some distance from being relevant still and there is still a lot of uncertainty to again, i don't think that will be a market driver for some time. francine: when you look at central banks around the world, the ecb, bank of england, the major ones, when you look at the

bank of japan and the fed, who has the toughest job? i think they are all in a very difficult situation. think -- it is difficult to say who has the toughest job but i would say given the environment in the u.s. and the divided political landscape, i think there are significant risks about going forward how the central bank will be able to navigate this environment, so in that sense, i think chairman powell has a very difficult environment to navigate, maybe more so than other places where the political landscape is a little more stable. francine: jean boivin, head of the blackrock investment institute. a flop for president trump in tulsa.

behind joe biden in national polls. this is bloomberg. ♪

francine: this is "bloomberg: surveillance."

a disappointing crowd for president trump's much-hyped campaign rally since the current -- pandemic in america. his campaign manager boasted one tickets, bute for there were just 6000 people inside according to the fire department. >> you are warriors. thank you. we had some very bad people outside. we had some very bad people outside. they were doing bad things. i stand before you today to declare the silent majority is stronger than ever before. [cheers] francine: for more on all of this, george wald bank joins us on the phone. what is the main takeaway from the trump rally? as you said in the intro, the crowd size is one of the key reactions i would have probably thought the key reaction and the

reason is because it was so short of expectations in a very red state. oklahoma is not going to go vote for joe biden in any possible combination of things and you saw this expectation from the trump campaign that is completely missed. i'm not even so focused on the people who were inside the building but the trump campaign built a stage outside for the over crowed -- overflow crowd it was expecting so it ignored the stage had been created at all. this is a real wake-up call for the trump campaign. they've got plenty of time until the election, but there has been some doubt about whether joe biden's polling lead nationally and in swing states was real. a rally on home

turf that didn't hit where they thought it would hit would come as a wake-up call for the trump campaign. the whitewhat was house response from the night that didn't go as planned. official response that maybe there were protesters in the way and it sort of feared into the media was mongering and people didn't want to go out for fears of the virus. i do think that you see here some of that virus fear, some of that demand crash you are seeing in businesses throughout the country and indeed throughout parts of the world that are facing this, that idea that people aren't coming out to spend. maybe they are not coming out to a rally that they have to sign a so until theyo do feel it is safe to do so. francine: derek wallbank on the latest.

should central banks reduce balance sheets before raising rates. and her daily ways in. we will discuss his article next, coming up shortly. lusk, this is what the markets are doing, focusing on a possible infection rate. parts of thet what market we are looking at. first of all, i'm looking at down 0.2%,ocks paring some losses, even as virus infection rates go up. looking at treasuries, pretty stable and you see crude oil in new york below $40 a barrel. this is bloomberg.

francine: economics, finance, and politics. this is "bloomberg: surveillance ." let's get straight to the first word news with dani burger.

dani: california's new cases of coronavirus rose by an electric this weekend, adding to fears of a second wave of the pandemic in some parts of the u.s. world health organization is americas region now accounts for 63% of new cases, led by brazil which sunday reported over 64,000 new infections. italy is looking at widening its budget deficit in the wake of coronavirus. the government plans to focus on infrastructure projects such as high-speed rail. vat.y include a cut to the news comes as the prime minister is drawing up an ambitious reform plan to lobby the european union for financial help. istabbing attack in reading being investigated as terrorism. saturday evening, a man approached a group in the town west of london and stabbed them. three people died in the incident. a 25-year-old local man has been

arrested on suspicion of murder. boris johnson said he is appalled and sickened by what happened. global news 24 hours a day, on-air and quicktake by bloomberg, powered by more than 2700 journalists and analysts in .ore than 120 countries i'm dani burger. this is bloomberg. francine: the governor of the bank of england has weighed in on how central banks move forward after the current crisis. in a bloomberg opinion piece, andrew bailey says it may be better to consider adjusting reserves first without waiting to raise interest rates on a sustained basis. the governor says elevated balance sheets could limit room for maneuver in future emergencies. you can read his article on the bloomberg terminal and the website. joining us now to talk about gilts is james athay. great to have you on the program. how did you take this article? it was very interesting

actually. this is definitely a departure from what the bank of england however heoward and central bank has engaged in quantitative easing or asset purchasing has thought about their exit strategy to the extent they have thought about their exit strategy. it is worth noting different economies probably suit a policy,t sequencing the sensitivities of the real economy. the u.k. really has a short dated flow to a mortgage system so we have a lot more consumer sensitivity for secured and unsecured lending, for the floating first and foremost and five years to a lesser degree. i think from a mainstream perspective, it is definitely easier to look at selling that asset that may see yields rise and the curve steepen. in the u.s., priced at the long

end, that takes a different response. either way, have to be honest. it is going to be tricky if and when they look to unwind the balance sheet given how much markets have become addicted to the ongoing expansion. it will always be a tricky process because as soon as you announce it, markets will react accordingly. francine: are we going to see a big repricing or at least a repricing of gilts? in very shorthad order, two messages from the bank of england about gilt yields, longer dated gilt yields. the curve with respect to the pace of the expansion of the balance sheet by purchases they announced last week and this from andrew bailey already talking about exit, looking to unwind the balance sheet. you would think there would be some revising of 10-year gilts

morning, a but this couple basis points lower, you are still 25, 30 basis points on the 10 year yield. that is showing that for now, markets aren't yet thinking about something so far in the future. i think there is plenty of reason why in spite of the slower pace of balance sheet accumulation by the bank of england, why investors are not looking to take them on just yet. francine: how do you see brexit panning out and how does that affect your view on a lot of u.k. assets? james: how do i see brexit panning out? i think it will pan out, foremost. i don't think we get anything approaching an all-encompassing deal. i don't expect there to be an extension of the transition. actually, i don't think that does anybody any good because it is constantly delaying the inevitable.

i think some sort of bare-bones agreement, in typical european fashion, when a deadline approaches, everyone gets in a room at 5:00, bleary-eyed, and nobody has every thing they didn't want. i would expect it to be something similar. i don't see that as a big strategic structural problem for for the u.k.-- economy but there is likely to be short-term destruction and we have to do border trolls and checks -- patrols and checks. it is interesting to me how much markets have ignored and sterling is reacting as negatively on some of these headlines we've accustomed to in the past. francine: if you look at europe, i don't know whether it is the fiscal policy, the plan we were expecting, even with some

problems to go through. do you like european assets now more than you did a couple of months ago? i don't really love european assets, but it would be difficult to say i dislike them more or like them less, partly for policy reasons and sentiment reasons. personally, i don't see this recovery fund as a big game changer. i think there is too much conditionality. it is too small. it really isn't a fiscal union in my opinion because treaty changes within europe and in terms of some, this doesn't lead you there. this is working around the treaty in quite a close fashion. i don't see it as a big game changer but it does suggest more cohesiveness than came earlier in the crisis. the ecb has shown they will not be put off by the ruling so they

are buying i assets. that lends some support but i have the same concerns european think are truly reflecting the underlying fundamentals or reality. they are being artificially held in place by policy steps which i don't think our sustainable. francine: what is your favorite buy right now? my space, i'm sorry to say i'm still very cautious and defensively positioned. although it looks like they have found value at the long end of some yield curves, for me, that is a risk i don't feel i'm being appropriately rewarded for taking on just yet because it is so high relative to the rest of the bond market and investors do have concerns about inflationary pressures down the road or the emotion of government balance

sheet credibility if you like, credit concerns in the sovereign space and it would be most acutely felt there. i see the asset from the i stille strategies, thinks like kiwi durations are cheap in 10-year. i still like being defensively positioned in fx. i think the dollar has more going for it than against it and em has come along way very fast and not just by fundamentals. i like owning dollars against some of the weaker em nations. ,rancine: james athey investment director at aberdeen standard investment. 1.9 billion euros vanish. wirecard said the mission cash on its balance sheet probably never existed. we have details on the scandal at the german payment from next. this is bloomberg. ♪

francine: this is "bloomberg: surveillance." the scandal deepens at wirecard. $2.1 billion have gone missing from the firm's balance sheets. wirecard says the cash probably does not exist. a company that was once concern -- consider the future of german fintech. dani burger, why i'd -- wirecard is falling further. what is the latest? the statement focused on the business at the heart of the scandal. wirecard saying descriptions of it were not correct. third party to

-- the settlements of those businesses were supposed to be going into accounts at these two asian banks and now, wirecard says in all likelihood, the accounts don't exist. that is where the 1.9 billion euros that has gone missing is supposed to exist. it is saying the vision of the hood didn't likeli operate to benefit the business. they will be investigating this division but it also means they have had to withdraw earnings from last year, the first quarter of 2020, and have been unable to release their most recent financial stadium -- statement that puts them in more trouble because it means they breached the term of their lungs with several banks so now 2 billion euros can be recalled if they don't get what lenders are demanding, which is more details --the scandal and francine: is this a company that

could go bust? dani: considering what has happened with the shares falling as much as they are, but this is also really a crown jewel for germany when they look across at the u.s., the likes of u.s. facebook and twitter, wirecard was the next big tech company for them aside from sap. fore is some onus regulators to get a handle on what is happening considering how important this had been for germany. the regulators themselves are likely going to be coming under increased scrutiny given the fact they have done things like restricted shortselling, going after the ft journalist who broke the story rather than the company itself. there is certainly a lot of pressure on all sides of this. francine: dani burger with the latest on wirecard. coming up, as the nation's capital in the u.k. them in silent, we discuss a crisis facing the entertainment

industry. artisticiew the director of the theater in london. this is bloomberg. ♪

francine: economics, finance, and politics. this is this is bloomberg. i'm francine lacqua in london. let's get here business flash with dani burger. 's ceo says the bailout deal may not pass. the biggest shareholder is threatening to block the plan which would dilute its holdings. they are holding emergency talks before an emergency shareholder meeting on thursday. pg and he has won final approval for its bankruptcy plan. it includes billions in damage stemming from wildfires linked to the company's equipment. it needed a judge to sign off to qualify for an insurance fund that will help recover damaged claims from any future blazes. american airlines is planning

three point $5 billion in new financing. it is a move away from its reliance on federal aid. the carrier is selling shares, senior secured notes and is entering a loan facility. a full recovery for the airline industry is expected to take years. that's the bloomberg business flash. johnson'sboris government is set to announce more easing of lockdown measures this week. in a major boost to the hospitality industry, the prime minister is expected to relax the two meter restriction. for ais still no guidance once thriving theater industry which will likely be one of the last to reopen. seeing 74ould be billion pounds in losses. what does the theater need to survive a pandemic and what should the sector look like upon reopening? by theglad to be joined

artistic director of london's world-renowned theater. thank you for joining us today. what would you be asking the u.k. government? what do you need to make the opening safe? >> first of all, we need investment. bailoutple call it a but for me, it is about investing in the infrastructure of our world-class arts movement. that doesn't just mean the stages of the west end but down the country and regional theaters that work in communities. what we will probably need are quite hefty figure to make sure we can stand again. the relaxing of two meters to one meter makes a significant difference but doesn't really change it that much for us. it means at two meters, we can .perate at 20% capacity

at one meter, we are possibly between 40 and 45. it becomes very difficult with the model we are currently using to open our theaters so really, the investment we need from the government is one that will allow us to stand on our feet dream produce again, and about what our sector will look like in the next two to three years. francine: are you in discussions? discussionlobby in about this possible bailout or whatever you want to call it, and how much have you seen? kwame: yes, we are amid discussions with the secretary of state and the treasury, and every thing i am hearing right now is very positive. i've said before i don't believe this government will stand by and let our world-class sector fall to its knees and die. the cost of rebooting our sector is much more than saving it right now, so those debates are

happening. it is just about the size of the investment and about public opinion, getting on our side that it is more than actors on the stage. theater reflects our soul and our national soul. francine: what about doing things like via zune or online things? -- zoom or online things? is it something you would be looking at as a producer or is it not the same experience and you don't become profitable that way? kwame: i think you answered it rather beautifully. our digital output is a byproduct and it is a great byproduct. it means people have access to what we are doing, but theater is like the new church. it is a congregation sitting next to each other. every director knows the final cast member in any play is the audience. the live experience cannot be replicated on video or digital.

however, going forward, there would not be a director of any theater that doesn't include the digital sphere at the core of the work we do in the future. we will have to make sure we are ready with products, as it were, if and when we ever find ourselves in a situation like this again. francine: what would a social distance theater look like? when are you thinking you could reopen with safety measures in place? kwame: again, i would say the model we currently have, opening with social distance is very, very hard. i think we are all hoping that by november to january, we will be able to get up and running again, possibly with some relaxation of social distancing, that we might be able to get back into the rehearsal room in a safe fashion and audiences know the environment is as safe as it can be. it is really hard.

many of us had to close flow,ctions mid postpone exciting productions we had ready to go. it will take us about three months to ramp back up, so in a way, we are sitting in limbo at the moment waiting for public health, waiting for the government to give us the go-ahead to reopen and reopen in a way that is economically viable. francine: can the pandemic be an opportunity for theaters to become more diverse and inclusive? kwame: again, another brilliant question. we cannot reopen in the way that we were before. there in a portable and on flipside, theater can do the very thing that we actually talk about all the time. it can educate, it can inform, but most importantly due to the proximity of human beings, it can change hearts and minds, and a more diverse -- and i don't just mean diverse in terms of

race which is tremendously important in this. inequality exists across our country and that does not exclude theaters. to cleaning to have our house inside as well as catalyze change on the outside, but it is also ability and disability. we can come back on the flipside renewed with the task that we with reflecting society and reflecting society in the best way possible. that's the role theater plays. it is a role we have played and will continue to play. we can lead the way. francine: what happens if we don't lead the way? how fast can you lead the way? kwame: i think we can lead the way with tenacity. nearly anyone in the arts, most people in the arts certainly when they begin see themselves as it progressive.

that doesn't quantify it into one form of politics, but certainly a progressive. we have heard with black lives matter's on the streets of every stake across america and the world, we have heard as a sector that we need to change, that we will change. i'm amid discussions with directors who are saying not just what can we do, but here are the actions we will take to deal with the structural inequalities that are rampant in our country and in our sector? people are not just saying i want to listen. people are saying i want to do. they are not saying i will put something up on instagram. they are saying i want to attack systemic racism and inequality in this country. as to when can it happen, it is happening now. we are already having discussions. it is already changing. we just have to make sure the government investment allows us to rebuild and rebuild with confidence. francine: thank you so much for

joining us today. kwame kwei-armah, the artistic director at the young vic theater. 20 more on the arts through the day and more on your stock market. this is what the s&p in europe is doing. european stocks are paring some losses. u.s. equity futures seem to be rallying more than before. there is an economic recovery under way and that seems to be going even as the virus infection rates rise. gold approaching the highest since 2012, treasuries on the dollar little changed. i'm looking at crude oil. crude oil, hovering below $40 a barrel in new york. ♪ you say that customers make their own rules.

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opinion, the governor says he checked the balance sheet before raising rates to give officials more firepower. rally in the headlines due to weak turnout. what this says about enthusiasm going into the election. in the world against names and finance with peter sanderson. good morning, everyone, this is bloomberg surveillance. markets, andt the a lot of the focus is certainly on what andrew bailey said in his opinion piece, a lot of focus is also on gold and oil. >> is no question, gold really has my attention. up, it is not back to the 2011 peaks